BNUMBER:  B-270144
DATE:  January 31, 1996
TITLE:  Mexican Intermodal Equipment, S.A. de C.V.

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Matter of:Mexican Intermodal Equipment, S.A. de C.V.

File:     B-270144

Date:     January 31, 1996

Daniel J. Katz, Esq., Edward H. Kim, Esq., and Kathy S. Ghiladi, Esq., 
Daniel J. Katz & Associates, for the protester.
Alan W. Mendelsohn, Esq., and Owen C. Wilson, Esq., Department of the 
Navy, for the agency.
Jennifer D. Westfall-McGrail, Esq., and Christine S. Melody, Esq., 
Office of the General Counsel, GAO, participated in the preparation of 
the decision.

DIGEST

Contracting officer reasonably determined that protester was not a 
responsible prospective contractor based upon reasonably based 
negative pre-award survey findings with regard to protester's 
production, technical, and transportation capabilities.

DECISION

Mexican Intermodal Equipment, S.A. de C.V. (MIE) protests the 
rejection of its offer under request for proposals (RFP) No. 
N62387-95-R-3094, issued by the Department of the Navy, Military 
Sealift Command for freight containers.  The protester argues that the 
contracting officer unreasonably determined it to be nonresponsible.

We deny the protest.

BACKGROUND

The RFP, which was issued on September 14, 1995, sought offers for the 
manufacture and delivery of 500 "end opening" 20-foot dry cargo 
freight containers, with award to be made to the lowest-priced, 
technically acceptable, responsible offeror.  Seven proposals were 
received by the September 22 closing date.  The agency conducted 
discussions with all offerors whose proposals were in the competitive 
range and solicited best and final offers (BAFO).  MIE's BAFO was the 
lowest-priced, technically acceptable offer.  The contracting officer 
determined that MIE was not a responsible prospective contractor, 
however, and on September 29, the agency awarded a contract to another 
offeror, MTI, Inc.

On October 3, the contracting officer notified MIE that it had been 
determined nonresponsible based on its poor performance under two 
prior Marine Corps contracts and the adverse findings of a Defense 
Contract Management Area Operations (DCMAO) office pre-award survey, 
which had just been conducted in conjunction with an ongoing Marine 
Corps procurement for containers.  The agency explains that in seeking 
to determine MIE's responsibility, the contracting officer asked the 
Marine Corps, Blount Island Command, for performance data regarding 
two contracts that MIE had recently performed as a subcontractor for 
its parent company, Olympic Container Corporation (OCC).[1]  The 
Marine Corps replied that MIE's first article had failed testing under 
the earlier of the two contracts and that MIE had delivered a year 
late on both contracts.  In addition, the DCMAO pre-award survey of 
MIE in connection with the ongoing Marine Corps procurement 
recommended no award based on negative findings in the areas of  
production capability, technical capability, and transportation 
capability.

By letter dated October 4, MIE complained to the contracting officer 
that since it was an affiliate of OCC, a United States (U.S.) small 
business concern, the contracting officer should have referred her 
determination of nonresponsibility to the cognizant Small Business 
Administration (SBA) Regional Office, pursuant to Federal Acquisition 
Regulation (FAR)  sec.  19.602.  The contracting officer responded that MIE 
could not be considered a small business because MIE had certified in 
its offer that it was a Mexican corporation, and because MIE did not 
have income effectively connected with the conduct of a trade or 
business in the U.S., or an office or place of business or a fiscal 
paying agent in the U.S.  By letter dated October 9, the protester 
asked the contracting officer to reconsider both her refusal to refer 
the matter of its responsibility to the SBA and her underlying 
determination of nonresponsibility.  On October 10, MIE filed a 
protest with our Office.

Subsequent to the filing of MIE's protest with our Office, the 
contracting officer contacted the SBA and asked it to determine 
whether MIE was indeed a small business under the relevant standard 
industrial classification code, and, if so, whether it was eligible 
for a certificate of competency (COC).  Our Office also contacted the 
SBA and asked for its opinion as to whether MIE was eligible to apply 
for a COC.  On November 29, the SBA ruled that MIE does not meet the 
definition of a business concern eligible for assistance as a small 
business and thus is ineligible for COC consideration.  In support of 
its adverse determination, the SBA concluded that MIE does not 
maintain a place of business in the United States within the 
contemplation of the governing regulations.[2]

While our Office generally will not review a negative responsibility 
determination concerning a small business, since such matters are 
ordinarily for referral to the SBA under COC procedures, where--as 
here--the SBA determines that a firm is ineligible to apply for a COC, 
we will review the responsibility determination.  Wallace & Wallace, 
Inc.; Wallace & Wallace Fuel Oil, Inc.--Recon., B-209859.2, B- 
209860.2, July 29, 1983, 83-2 CPD  para.  142.

ANALYSIS

The protester contends that the contracting officer's determination of 
nonresponsibility lacks a reasonable basis.  MIE maintains that the 
findings of the pre-award survey team regarding its production, 
technical, and transportation capabilities are unsupported and 
unreasonable.  It further maintains that its performance under the two 
previously cited Marine Corps contracts was not deficient.

In general, the determination of a prospective contractor's 
responsibility is the duty of the contracting officer, who is vested 
with a wide degree of discretion and business judgment.  We therefore 
will not question a nonresponsibility determination unless the record 
shows bad faith on the part of contracting officials or that the 
determination lacks a reasonable basis.  Standard Tank Cleaning Corp., 
B-245364, Jan. 2, 1992, 92-1 CPD  para.  3.  A contracting officer generally 
may rely on the results of a pre-award survey in determining a 
prospective awardee's responsibility, System Dev. Corp., B-212624, 
Dec. 5, 1983, 83-2 CPD  para.  644, but where he or she does so, we will 
consider the accuracy of the pre-award survey information relied upon 
in judging whether a negative determination of responsibility is 
reasonable.  Fairchild Comms. & Elecs. Co., 66 Comp. Gen. 109 (1986), 
86-2 CPD  para.  633.

MIE first takes issue with the findings of the DCMAO surveyor who 
reviewed its production capability, arguing that he lacked a 
reasonable basis for his recommendation of no award in this area.  The 
protester complains that the surveyor faulted it for failing to submit 
a milestone chart or a production plan; this was unfair, the protester 
maintains, since it did provide a production plan written in Spanish 
(which it was not given ample time to translate) and since it did 
furnish a milestone chart within 1 day after he requested it.  The 
protester also complains that the surveyor refused to consider 
information relating to its parent corporation, OCC, in considering 
its production history.  Finally, MIE complains that the surveyor made 
much of the fact that its facilities were exposed to the open air and 
that certain supplies, equipment, and completed items were stored 
uncovered and outdoors.  The protester asserts that these criticisms 
are unreasonable:  that the only equipment stored outside is related 
to uninstalled steel forging which has no relation to the actual 
production of containers; that the only supplies stored outside are 
steel coils, and that although these coils experience some oxidation 
on the outer band, they are cut into sheets and edge-trimmed prior to 
installation; and that it is ludicrous to object to storage of the 
completed containers outside since they are manufactured for outdoor 
use.

Based on our review of the full text of the surveyor's report and the 
protester's arguments, we conclude that the surveyor had a reasonable 
basis for his findings in the area of production.  First, the surveyor 
did not fault the protester for failing to furnish a milestone chart 
or a production plan; he faulted it for failing "to submit a milestone 
chart or production plan that would adequately identify the various 
manufacturing processes required and control of the production 
processes required during production."  In other words, the surveyor's 
criticism was evidently directed at the content of the production 
plan, and not that no plan was furnished.  Second, the record does not 
reflect that the surveyor refused to consider information relating to 
OCC; rather, it shows that he attempted to contact the buying activity 
responsible for the two OCC contracts that MIE identified in its 
proposal, but was unable to get in touch with anyone in time to 
consider this information.[3]  Finally, although the protester has 
offered rebuttals to the surveyor's criticisms of its outdoor storage 
of equipment, supplies, and finished products, it has offered no 
rebuttal to the surveyor's most significant criticism regarding its 
production capability, i.e., that MIE's production facility is not 
satisfactory since most of the main production area floors are 
partially dirt and both ends (and one side) of the building are open, 
which means that there is nothing to prevent rain and sand from 
entering the work area during high winds and heavy rain storms.

The protester also takes issue with its pre-award survey rating of 
unsatisfactory in the area of technical capability.  MIE contends that 
its rating in this area was based, in large part, on the allegedly 
inadequate qualifications of its general manager, whose resume 
(furnished to the pre-award team) shows that he has been president of 
OCC since 1975 and general manager of MIE since 1990.  The protester 
argues that its organizational chart demonstrates that its general 
manager plays an active role in both management functions and 
technical aspects of the company's manufacturing activities.

Again, based on our review of the surveyor's report and the 
protester's arguments, we do not find unreasonable the surveyor's 
findings in the area of technical capability.  The surveyor's 
criticism did not focus only on the qualifications of MIE's general 
manager; it also focused on the qualifications of MIE's other key 
personnel.  In this regard, the surveyor noted that "after the 
translation of resumes for the remaining key personnel, the surveyor 
feels that the prospective contractor lacks the experienced technical 
personnel to manage the technical and production functions to ensure 
completion of a contract on schedule, if awarded."  The protester has 
offered no rebuttal to this conclusion.  We think that the surveyor's 
concerns about the qualifications of the individuals who would 
actually manage the day-to-day production operation provide a 
reasonable basis for his negative findings in this area, regardless of 
the qualifications of MIE's general manager. 

Finally, MIE disputes the pre-award survey finding of unsatisfactory 
with regard to its transportation capability.  The protester maintains 
that the surveyor incorrectly concluded that its proposed methods of 
conveyance were unavailable.

Based on our review of the portion of the pre-award survey addressing 
MIE's transportation capabilities, we find that the surveyor's 
principal objection to the protester's proposed methods of conveyance 
was not that they were unavailable, but rather that MIE had not 
presented a transportation plan that adequately addressed the 
difficulties (such as obtaining the permits necessary for a U.S. 
carrier to operate in Mexico or for a Mexican carrier to operate in 
the U.S.) that it would encounter in employing any of them.  We think 
that this was a legitimate area of concern.  Further, although the 
protester has furnished our Office with letters from two carriers 
which confirm that MIE has used them in the past for shipping from its 
plant in Mexico to destinations in the U.S., the date on the letters 
(October 4 in both cases) indicate that these items were not made 
available to the pre-award team at the time it was conducting its 
survey; thus we do not see how the pre-award team can be faulted for 
not having taken them into consideration.[4]

Finally, the protester argues that the agency's failure to award it 
this contract, as well as a contemporaneous Marine Corps contract for 
containers (i.e., the contract for which the DCMAO survey was 
prepared), based on concurrent findings of nonresponsibility, 
constitutes a de facto debarment or suspension of the firm.  A de 
facto debarment occurs where a firm is excluded from contracting 
because of a contracting agency's making repeated determinations of 
nonresponsibility or even a single determination of nonresponsibility 
as part of a long-term disqualification attempt, without following the 
procedures for suspension or debarment set forth in FAR Subpart 9.4.  
Government Contract Advisory Servs., Inc., B-255918; B-255919, Mar. 8, 
1994, 94-1 CPD  para.  181.  Here, the concurrence of the Marine Corps and 
Military Sealift Command determinations of nonresponsibility does not 
demonstrate that they were part of a long-term disqualification 
attempt; that different contracting officers reached the same 
conclusion at the same time regarding the protester's responsibility 
is merely a reflection of the fact that the determinations were based 
on the same current information and is not a de facto debarment.  Id.  

The protest is denied.

Comptroller General
of the United States

1. The two contracts, No. M67004-91-C-0006 (for 40 "side-open" 
containers) and No. M68335-94-C-0016 (for 64 "open-top" containers) 
were the only previously performed government contracts identified by 
the protester in its proposal.

2. MIE has appealed this determination to SBA's Office of Hearings and 
Appeals.

3. In this regard, we note that the pre-award survey was conducted 
under legitimate time constraints--it was performed in mid-September 
for use in connection with an award to be made by the end of that 
month.  We also note that the contracts at issue are the two Marine 
Corps contracts, referenced above, which MIE recently performed as a 
subcontractor for OCC, and with respect to which the Marine Corps 
advised the contracting officer that it regarded MIE's performance as 
poor.

4. Since, in our view, the contracting officer could reasonably have 
concluded, based on the findings of the pre-award survey team, that 
MIE was not a responsible prospective contractor, we need not consider 
whether MIE's allegedly poor performance under the two Marine Corps 
contracts provides a separate basis for finding it nonresponsible.  We 
note that the protester has furnished evidence (not rebutted by the 
agency) indicating that its late delivery under the 1991 contract was 
attributable to a technical problem, which it eventually overcame, and 
that its late delivery under the 1994 contract was attributable to the 
agency's failure to furnish it with required serial numbers for the 
containers in a timely manner.